EX-99.1 2 a3q22earningsrelease.htm EX-99.1 Document

NEWS RELEASE
orilogoa09.jpg
At Old Republic:
At Financial Relations Board:
Craig R. Smiddy, President and CEO
Analysts/Investors: Joe Calabrese 212/827-3772
OLD REPUBLIC REPORTS RESULTS FOR THE THIRD QUARTER AND FIRST NINE MONTHS 2022
OVERALL RESULTS
Quarters Ended September 30,Nine Months Ended September 30,
20222021% Change20222021% Change
Pretax income (loss)$(119.6)$106.0 $208.3 $1,132.6 
Pretax investment gains (losses)(377.1)(192.6)(549.5)303.7 
Pretax income (loss) excluding investment gains (losses)$257.5 $298.6 -13.8 %$757.9 $828.8 -8.6 %
Net income (loss)$(91.7)$88.7 $174.3 $907.3 
Net of tax investment gains (losses)(297.9)(151.6)(433.8)239.6 
Net income (loss) excluding investment gains (losses)$206.1 $240.4 -14.3 %$608.1 $667.6 -8.9 %
Combined ratio91.4 %89.8 %91.4 %90.4 %
PER DILUTED SHARE
Quarters Ended September 30,Nine Months Ended September 30,
20222021% Change20222021% Change
Net income (loss)$(.31)$.29 $.57 $3.00 
Net of tax investment gains (losses)(.99)(.50)(1.42).79 
Net income (loss) excluding investment gains (losses)$.68 $.79 -13.9 %$1.99 $2.21 -10.0 %
SHAREHOLDERS' EQUITY (BOOK VALUE)
Sep. 30,Dec. 31,
20222021% Change
Total$5,678.1 $6,893.2 -17.6 %
Per Common Share$18.92 $22.76 -16.9 %
________

All amounts in this report are stated in millions except where noted, common stock data and percentages.

CHICAGO – October 27, 2022 – Old Republic International Corporation (NYSE: ORI) today reported pretax income, excluding investment gains (losses), of $257.5 for the quarter and $757.9 for the first nine months of 2022. Results are within expectations, with General Insurance pretax operating income rising 15%, while the effect of increasing mortgage interest rates contributed to a reduction in Title Insurance pretax operating income of 46%. Both General Insurance and Title Insurance produced solid underwriting results that drove a consolidated combined ratio of 91.4% for both the quarter and first nine months of 2022.

Consolidated net premiums and fees earned were down 5.5% for the quarter, with General Insurance net earned premiums growing 7.1%, offset by a 15.2% decline in Title Insurance net premiums and fees earned as a result of lower revenues in both direct and agency operations. For the first nine months, consolidated net premiums and fees earned were relatively steady, reflecting growth in General Insurance of 7.3%, offset by a 6.9% decline in Title Insurance. Net investment income increased in both 2022 periods, primarily reflecting growth in the invested asset base and slightly higher investment yields earned in the quarter.

During the quarter, the Company returned total capital to shareholders of $479.1, comprised of $374.3 in common stock dividends, including a special cash dividend of $1.00 per share, and $104.8 of share repurchases (4.8 million shares at an average price of $21.49 per share). Following the close of the quarter and through October 26, the company repurchased 5.3 million additional shares for $119.3 (average price of $22.37), leaving $225.8 remaining under the current repurchase authorization.

Book value per share was $18.92 as of September 30, 2022, reflecting declining fair market values in both the fixed income and equity portfolios, partially offset by strong operating earnings. With the addition of dividends declared during the first nine months, this was a decrease of 9.4% over year-end 2021.





Old Republic International Corporation

Old Republic's business is managed for the long run. In this context management's key objectives are to achieve highly profitable operating results over the long term, and to ensure balance sheet strength for the primary needs of the insurance subsidiaries' underwriting and related services business. In this view, the evaluation of periodic and long-term results excludes consideration of all investment gains (losses). Under Generally Accepted Accounting Principles (GAAP), however, net income, inclusive of investment gains (losses), is the measure of total profitability.

In management's opinion, the focus on income excluding investment gains (losses), also described herein as segment pretax operating income (loss), provides a better way to analyze, evaluate, and establish accountability for the results of the insurance operations. The inclusion of realized investment gains (losses) in net income can mask trends in operating results, because such realizations are often highly discretionary. Similarly, the inclusion of unrealized investment gains (losses) in equity securities can further distort such operating results with significant period-to-period fluctuations.

FINANCIAL HIGHLIGHTS
Quarters Ended September 30,Nine Months Ended September 30,
SUMMARY INCOME STATEMENTS:20222021% Change20222021% Change
Revenues:
Net premiums and fees earned$1,943.3 $2,055.4 -5.5 %$5,844.6 $5,881.6 -0.6 %
Net investment income115.1 111.6 3.1 329.2 323.6 1.7 
Other income39.7 37.8 5.2 113.7 112.0 1.5 
Total operating revenues2,098.2 2,204.9 -4.8 6,287.7 6,317.3 -0.5 
Investment gains (losses):
Realized from actual transactions and impairments(26.2)6.6 92.3 15.6 
Unrealized from changes in fair value of equity securities(350.8)(199.3)(641.8)288.1 
Total investment gains (losses)(377.1)(192.6)(549.5)303.7 
Total revenues1,721.0 2,012.2 5,738.1 6,621.0 
Operating expenses:
Loss and loss adjustment expenses628.6 618.4 1.6 1,875.2 1,846.8 1.5 
Sales and general expenses1,195.8 1,270.8 -5.9 3,604.5 3,601.8 0.1 
Interest and other charges16.3 16.8 -3.4 49.9 39.7 25.7 
Total operating expenses1,840.7 1,906.2 -3.4 %5,529.7 5,488.4 0.8 %
Pretax income (loss)(119.6)106.0 208.3 1,132.6 
Income taxes (credits)(27.8)17.2 34.0 225.2 
Net income (loss)$(91.7)$88.7 $174.3 $907.3 
COMMON STOCK STATISTICS:
Components of net income (loss) per share:
Basic net income (loss) excluding investment gains (losses)
$0.68 $0.79 -13.9 %$2.00 $2.22 -9.9 %
Net investment gains (losses):
Realized from actual transactions and impairments(0.07)0.02 0.24 0.04 
Unrealized from changes in fair value of equity securities(0.92)(0.52)(1.67)0.75 
Basic net income (loss)$(0.31)$0.29 $0.57 $3.01 
Diluted net income (loss) excluding investment gains (losses)
$0.68 $0.79 -13.9 %$1.99 $2.21 -10.0 %
Net investment gains (losses):
Realized from actual transactions and impairments(0.07)0.02 0.24 0.04 
Unrealized from changes in fair value of equity securities(0.92)(0.52)(1.66)0.75 
Diluted net income (loss)$(0.31)$0.29 $0.57 $3.00 
Cash dividends on common stock$1.23 $1.72 $1.69 $2.16 
Book value per share$18.92 $20.96 -9.7 %
We believe the information presented in the following table highlights the most meaningful indicators of ORI's segmented and consolidated financial performance. The information underscores the performance of our underwriting operations, as well as our sound investment of the capital and underwriting cash flows from these operations.

2

Old Republic International Corporation

Sources of Consolidated Income (Loss)
Quarters Ended September 30,Nine Months Ended September 30,
20222021% Change20222021% Change
Net premiums and fees earned:
General insurance$967.3 $902.8 7.1 %$2,821.8 $2,629.2 7.3 %
Title insurance968.1 1,142.1 -15.2 2,997.3 3,218.7 -6.9 
RFIG run-off5.5 7.7 -28.0 18.1 25.4 -28.7 
Corporate & other2.3 2.6 -12.8 7.2 8.2 -11.6 
Consolidated$1,943.3 $2,055.4 -5.5 %$5,844.6 $5,881.6 -0.6 %
Underwriting and related services income (loss):
General insurance$96.2 $77.7 23.8 %$243.6 $202.0 20.6 %
Title insurance61.1 125.3 -51.2 230.0 347.8 -33.9 
RFIG run-off7.6 5.8 31.7 26.1 12.1 114.3 
Corporate & other(6.3)(4.9)-28.5 (21.2)(17.1)-23.7 
Consolidated$158.6 $203.9 -22.2 %$478.6 $544.9 -12.2 %
Consolidated underwriting ratio:
Loss ratio:
Current year35.7 %32.4 %34.7 %33.4 %
Prior years(3.4)(2.3)(2.6)(2.0)
Total32.3 30.1 32.1 31.4 
Expense ratio59.1 59.7 59.3 59.0 
Combined ratio91.4 %89.8 %91.4 %90.4 %
Net investment income:
General insurance$88.8 $84.2 5.4 %$254.8 $256.2 -0.5 %
Title insurance11.8 10.9 8.7 34.2 32.5 5.5 
RFIG run-off1.5 2.6 -39.7 5.2 8.7 -40.3 
Corporate & other12.9 13.8 -6.9 34.8 26.1 33.6 
Consolidated$115.1 $111.6 3.1 %$329.2 $323.6 1.7 %
Interest and other charges (credits):
General insurance$17.3 $16.1 $50.3 $48.2 
Title insurance(0.3)0.4 0.5 1.9 
RFIG run-off— — — — 
Corporate & other (a)(0.7)0.2 (0.9)(10.5)
Consolidated$16.3 $16.8 -3.4 %$49.9 $39.7 25.7 %
Segmented and consolidated pretax income (loss)
excluding investment gains (losses):
General insurance$167.6 $145.8 15.0 %$448.1 $410.0 9.3 %
Title insurance73.3 135.7 -46.0 263.8 378.3 -30.3 
RFIG run-off9.2 8.4 9.6 31.3 20.9 49.7 
Corporate & other7.2 8.6 -15.9 14.6 19.5 -25.1 
Consolidated 257.5 298.6 -13.8 %757.9 828.8 -8.6 %
Income taxes (credits) on above51.3 58.2 149.7 161.1 
Net income (loss) excluding
investment gains (losses)206.1 240.4 -14.3 %608.1 667.6 -8.9 %
Consolidated pretax investment gains (losses):
Realized from actual transactions
and impairments(26.2)6.6 92.3 15.6 
Unrealized from changes in
fair value of equity securities(350.8)(199.3)(641.8)288.1 
Total(377.1)(192.6)(549.5)303.7 
Income taxes (credits) on above(79.2)(40.9)(115.6)64.0 
Net of tax investment gains (losses)(297.9)(151.6)(433.8)239.6 
 Net income (loss)$(91.7)$88.7 $174.3 $907.3 
Consolidated operating cash flow$500.1 $455.1 $903.4 $970.6 
(a) Includes consolidation/elimination entries.

3

Old Republic International Corporation

General Insurance Segment Operating Results
Quarters Ended September 30,Nine Months Ended September 30,
20222021% Change20222021% Change
Net premiums written$1,066.3 $972.8 9.6 %$3,029.4 $2,742.3 10.5 %
Net premiums earned967.3 902.8 7.1 2,821.8 2,629.2 7.3 
Net investment income88.8 84.2 5.4 254.8 256.2 -0.5 
Other income39.5 37.5 5.4 112.9 111.2 1.6 
Operating revenues1,095.6 1,024.6 6.9 3,189.7 2,996.7 6.4 
Loss and loss adjustment expenses606.6 585.4 3.6 1,804.9 1,743.4 3.5 
Sales and general expenses304.0 277.1 9.7 886.2 794.9 11.5 
Interest and other charges17.3 16.1 7.5 50.3 48.2 4.3 
Operating expenses928.0 878.8 5.6 2,741.5 2,586.6 6.0 
Segment pretax operating income (loss)$167.6 $145.8 15.0 %$448.1 $410.0 9.3 %
Loss ratio62.7 %64.8 %64.0 %66.3 %
Expense ratio27.3 26.5 27.4 26.0 
Combined ratio90.0 %91.3 %91.4 %92.3 %

General Insurance net premiums earned increased 7.1% and 7.3% for the quarter and first nine months, respectively, driven by growth in commercial auto and workers' compensation lines of coverage. Premium rate increases for most lines of coverage, high renewal retention ratios, and new business production all contributed. Net investment income increased in the quarter, reflecting growth in the investment base and slightly higher investment yields earned.

The reported loss ratio for General Insurance improved in the quarter, inclusive of favorable reserve development from prior periods and lower current period loss costs. Favorable development of 4.7% in the quarter came predominantly from the commercial auto and workers' compensation lines of coverage, partially offset by unfavorable development in the financial indemnity line of coverage. The current period loss costs reflect several years of premium rate increases, underwriting actions, a shift in the line of coverage mix, and a relatively nominal amount from Hurricane Ian.

The third quarter and first nine month expense ratios were elevated compared to the same periods last year, generally reflecting the shift in line of coverage mix. Investments in new products and geographies in recent years have diversified the General Insurance business, resulting in shifts in the lines of coverage mix toward lines with higher expense ratios and lower current period loss ratios.

Together, these factors produced highly profitable combined ratios and greater pretax operating income for the periods reported.

The following table shows recent annual and interim periods' loss ratios and the effects of loss development trends:
Effect of Prior Periods'
(Favorable)/Loss Ratio Excluding
ReportedUnfavorable LossPrior Periods' Loss
Loss RatioReserves DevelopmentReserves Development
201771.8 %0.7 %71.1 %
201872.2 — 72.2 
201971.8 0.4 71.4 
202069.9 (0.8)70.7 
202164.8 %(3.8)%68.6 %
3rd Quarter 202164.8 %(3.2)%68.0 %
3rd Quarter 202262.7 %(4.7)%67.4 %
1st Nine Months 202166.3 %(2.9)%69.2 %
1st Nine Months 202264.0 %(3.3)%67.3 %

Quarterly and annual loss ratios and trends may not be indicative of future outcomes for a business with relatively long claim payment patterns. We target combined ratios between 90% and 95%, and based on our historical line of coverage mix, a loss ratio average in the high 60% to low 70% range, and an expense ratio average of 25%. These components of the combined ratio will continue to reflect the line of coverage mix.
4

Old Republic International Corporation

Title Insurance Segment Operating Results
Quarters Ended September 30,Nine Months Ended September 30,
20222021% Change20222021% Change
Net premiums and fees earned$968.1 $1,142.1 -15.2 %$2,997.3 $3,218.7 -6.9 %
Net investment income11.8 10.9 8.7 34.2 32.5 5.5 
Other income0.2 0.3 -27.8 0.7 0.8 -12.2 
Operating revenues980.1 1,153.3 -15.0 3,032.3 3,252.0 -6.8 
Loss and loss adjustment expenses26.2 32.9 -20.4 84.6 95.4 -11.2 
Sales and general expenses880.9 984.1 -10.5 2,683.3 2,776.3 -3.4 
Interest and other charges(0.3)0.4 -165.6 0.5 1.9 -73.4 
Operating expenses906.8 1,017.6 -10.9 2,768.5 2,873.7 -3.7 
Segment pretax operating income (loss)$73.3 $135.7 -46.0 %$263.8 $378.3 -30.3 %
Loss ratio2.7 %2.9 %2.8 %3.0 %
Expense ratio91.0 86.1 89.5 86.2 
Combined ratio93.7 %89.0 %92.3 %89.2 %


Title Insurance net premiums and fees earned declined by 15.2% and 6.9% for the third quarter and first nine months, respectively. Both directly produced and agency produced revenues declined during the quarter, and it is expected that such revenues will continue to be lower in the fourth quarter of this year when compared to the same period last year. The main driver of these trends is increasing mortgage interest rates which continue to drive a steep reduction in refinance activity and to a lesser extent, purchase activity. An uptick in commercial transaction activity resulted in strong commercial premium growth during the quarter and first nine month periods. Net investment income increased in both 2022 periods, reflecting growth in the invested asset base and slightly higher investment yields earned in the quarter.

Title Insurance's loss ratios were relatively consistent for the quarter and first nine months. The third quarter and first nine month's expense ratios were elevated compared to the same periods last year, generally reflecting the combination of lower directly produced revenues that carry higher fixed expenses, and to a lesser extent, a greater proportion of agency produced revenues that have a higher overall expense ratio.

Together, these factors produced profitable combined ratios albeit lower pretax operating income for the periods reported.

The following table shows recent annual and interim periods’ loss ratios and the effects of loss development trends:
Effect of Prior Periods'
(Favorable)/Loss Ratio Excluding
ReportedUnfavorable LossPrior Periods' Loss
Loss RatioReserves DevelopmentReserves Development
20170.8 %(3.0)%3.8 %
20181.9 (1.8)3.7 
20192.5 (1.2)3.7 
20202.3 (1.3)3.6 
20212.6 %(1.0)%3.6 %
3rd Quarter 20212.9 %(0.8)%3.7 %
3rd Quarter 20222.7 %(0.9)%3.6 %
1st Nine Months 20213.0 %(0.7)%3.7 %
1st Nine Months 20222.8 %(0.8)%3.6 %

5

Old Republic International Corporation

RFIG Run-off Segment Operating Results - Mortgage Insurance
Quarters Ended September 30,Nine Months Ended September 30,
20222021% Change20222021% Change
Net premiums earned$5.5 $7.7 -28.0 %$18.1 $25.4 -28.7 %
Net investment income1.5 2.6 -39.7 5.2 8.7 -40.3 
Loss and loss adjustment expenses(5.2)(1.1)N/M(17.5)3.4 N/M
Pretax operating income (loss)$9.2 $8.4 9.6 %$31.3 $20.9 49.7 %
Loss ratio-93.3 %-14.5 %-96.5 %13.7 %
Expense ratio55.3 39.0 52.7 38.5 
Combined ratio-38.0 %24.5 %-43.8 %52.2 %

Pretax operating results of RFIG Run-off reflect the continuing drop in net earned premiums in line with the declining risk in force, and significantly lower loss costs compared to the 2021 periods. Net investment income decreased in both 2022 periods, reflecting a declining invested asset base, driven by the payment of extraordinary dividends of $35.0 and $105.0 to the parent company during the third quarter and first nine months, respectively. Loss costs reflect fewer newly reported delinquencies along with improving trends in cure rates.

Together, these factors produced greater pretax operating income for the periods reported.

The following table shows recent annual and interim periods' loss ratios and the effects of loss development trends:

Effect of Prior Periods'
(Favorable)/Loss Ratio Excluding
ReportedUnfavorable LossPrior Periods' Loss
Loss RatioReserves DevelopmentReserves Development
201757.6 %(38.3)%95.9 %
201843.2 (27.0)70.2 
201955.0 (12.5)67.5 
202081.7 (26.5)108.2 
2021(5.3)%(67.5)%62.2 %
3rd Quarter 2021(14.5)%(106.3)%91.8 %
3rd Quarter 2022(93.3)%(186.8)%93.5 %
1st Nine Months 202113.7 %(47.7)%61.4 %
1st Nine Months 2022(96.5)%(169.7)%73.2 %



6

Old Republic International Corporation

Corporate & Other Operating Results
Quarters Ended September 30,Nine Months Ended September 30,
20222021% Change20222021% Change
Net life and accident premiums earned$2.3 $2.6 -12.8 %$7.2 $8.2 -11.6 %
Net investment income12.9 13.8 -6.9 34.8 26.1 33.6 
Other operating income— — — — — — 
Operating revenues15.2 16.5 -7.8 42.2 34.3 23.0 
Benefits and loss and loss adjustment expenses0.9 1.1 -18.1 3.1 4.5 -31.8 
Insurance expenses0.7 0.8 -11.6 2.4 2.6 -7.8 
Corporate, interest and other expenses - net6.3 5.9 6.5 22.0 7.5 191.1 
Operating expenses7.9 7.8 1.1 27.6 14.8 86.5 
Corporate & other pretax operating income (loss)$7.2 $8.6 -15.9 %$14.6 $19.5 -25.1 %

This segment includes a small life and accident insurance business and the net costs associated with the parent holding company and several internal corporate services subsidiaries. The segment tends to produce highly variable results stemming from volatility inherent from the lack of scale. For the quarter, net investment income declined partially attributable to the return of capital to shareholders. For the first nine months, interest expense increased due to the issuance of $650 million of debt late in the second quarter of 2021, partially offset by net investment income from a higher level of investments and higher investment yields earned.

Summary Consolidated Balance Sheet
September 30,December 31,September 30,
202220212021
Assets:
Cash and fixed income securities$12,305.8 $11,399.6 $11,721.9 
Equity securities3,045.4 5,302.8 4,828.0 
Other invested assets140.6 116.5 116.7 
Cash and invested assets15,491.8 16,818.9 16,666.7 
Accounts and premiums receivable2,096.9 1,768.7 1,861.4 
Federal income tax recoverable127.4 11.8 — 
Reinsurance balances recoverable5,679.7 4,943.4 5,054.7 
Deferred policy acquisition costs386.7 350.4 355.3 
Sundry assets1,164.2 1,088.4 1,051.6 
Total assets$24,947.0 $24,981.8 $24,989.9 
Liabilities and Shareholders' Equity:
Policy liabilities$3,182.6 $2,752.0 $2,884.7 
Loss and loss adjustment expense reserves12,174.7 11,425.5 11,433.7 
Federal income tax payable2.0 249.5 152.8 
Reinsurance balances and funds1,154.3 866.0 942.4 
Debt1,596.6 1,588.5 1,588.2 
Sundry liabilities1,158.5 1,206.9 1,658.4 
Total liabilities19,268.9 18,088.6 18,660.5 
Shareholders' equity5,678.1 6,893.2 6,329.4 
Total liabilities and shareholders' equity$24,947.0 $24,981.8 $24,989.9 

7

Old Republic International Corporation

Cash, Invested Assets, and Shareholders' Equity
% Change
Sep. 30,Dec. 31,Sep. 30,Sep. '22/Sep. '22/
202220212021Dec. '21Sep. '21
Cash and invested assets:
Fixed income securities, cash and other invested assets$12,446.4 $11,516.1 $11,838.6 8.1 %5.1 %
Equity securities3,045.4 5,302.8 4,828.0 -42.6 -36.9 
Total per balance sheet$15,491.8 $16,818.9 $16,666.7 -7.9 %-7.0 %
Total at cost for all$15,363.6 $15,045.8 $15,244.2 2.1 %0.8 %
Composition of shareholders' equity per share:
Equity before items below$19.00 $18.50 $17.85 2.7 %6.4 %
Unrealized investment gains (losses) and other
accumulated comprehensive income (loss)(0.08)4.26 3.11 
Total$18.92 $22.76 $20.96 -16.9 %-9.7 %
Segmented composition of
 shareholders' equity per share:
Excluding RFIG run-off segment$17.94 $21.47 $19.65 -16.4 %-8.7 %
RFIG run-off segment0.98 1.29 1.31 
Consolidated total$18.92 $22.76 $20.96 -16.9 %-9.7 %

Old Republic's invested assets portfolio is directed in consideration of enterprise-wide risk management objectives. Most importantly, these are intended to ensure solid funding of the insurance subsidiaries' long-term claim payment obligations to policyholders and their beneficiaries, as well as the long-term stability of the subsidiaries’ capital base. For these reasons, the investment portfolio does not contain high risk or illiquid asset classes and has zero or extremely limited exposure to, collateralized debt obligations (CDO's), credit default and interest rate swaps, hybrid securities, asset-backed securities (ABS), guaranteed investment contracts (GIC), structured investment vehicles (SIV), auction rate variable short-term securities, limited partnerships, derivatives, hedge funds or private equity investments. Moreover, the Company does not engage in hedging or securities lending transactions, nor does it invest in securities whose values are predicated on non-regulated financial instruments exhibiting amorphous or unfunded counter-party risk attributes.

As of September 30, 2022, the consolidated investment portfolio reflected an allocation of approximately 80% to fixed income (bonds and notes) and short-term investments, and 20% to equity securities (common stock). During the quarter, we continued to reduce our equity holdings and reinvest the proceeds in fixed income securities. The fixed income portfolio continues to be the anchor for the insurance underwriting subsidiaries' obligations. The maturities of our fixed income assets are matched to the expected liabilities for claim payment obligations to policyholders and their beneficiaries. The quality of the investment portfolio remains at high levels. The Company's third quarter net income includes investment impairment charges of $120.9, reflecting management's intent to dispose of certain fixed income securities currently in an unrealized loss position, driven by tax planning considerations.

A significant portion of our investable funds have been directed toward high-quality common stocks of U.S. companies (currently limited to approximately 75 issues). We favor those with long-term records of reasonable earnings growth and steadily increasing dividends. Pursuant to our enterprise risk management guidelines and controls, we perform regular stress tests of the equities portfolio to gain reasonable assurance that periodic downdrafts in market prices would not seriously undermine our financial strength and the long-term continuity and prospects of our insurance underwriting business.

8

Old Republic International Corporation

Changes in shareholders' equity per share are reflected in the following table. As shown, these resulted mostly from net income excluding net investment gains (losses), realized and unrealized investment gains (losses), and dividend payments to shareholders.
Shareholders' Equity Per Share
QuarterYear
EndedNine Months Ended Ended
Sep. 30,September 30,Dec. 31,
2022202220212021
Beginning balance$20.99 $22.76 $20.75 $20.75 
Changes in shareholders' equity:
Net income (loss) excluding net investment gains (losses)0.68 2.00 2.22 3.10 
Net of tax realized investment gains (losses)(0.07)0.24 0.04 0.02 
Net of tax unrealized investment gains (losses):
Fixed income securities(0.47)(2.62)(0.66)(0.97)
Equity securities(0.92)(1.67)0.75 1.96 
Total net of tax realized and unrealized
investment gains (losses)(1.46)(4.05)0.13 1.01 
Cash dividends(1.23)(1.69)(2.16)(2.38)
Other(0.06)(0.10)0.02 0.28 
Net change(2.07)(3.84)0.21 2.01 
Ending balance$18.92 $18.92 $20.96 $22.76 
Percentage change for the period-9.9 %-16.9 %1.0 %9.7 %

Capitalization
Capitalization
September 30,December 31,September 30,
202220212021
Debt:
4.875% Senior Notes due 2024$398.8 $398.4 $398.3 
3.875% Senior Notes due 2026547.8 547.3 547.2 
3.850% Senior Notes due 2051642.8 642.6 642.6 
Other miscellaneous debt7.1 — — 
Total debt1,596.6 1,588.5 1,588.2 
Common shareholders' equity5,678.1 6,893.2 6,329.4 
Total capitalization$7,274.7 $8,481.7 $7,917.6 
Capitalization ratios:
Debt21.9 %18.7 %20.1 %
Common shareholders' equity78.1 81.3 79.9 
Total100.0 %100.0 %100.0 %

Managing Old Republic's Insurance Business for the Long-Run
The insurance business is distinguished from most others in that the prices (premiums) charged for most products are set without knowing what the ultimate loss costs will be. We also can't know exactly when claims will be paid, which may be many years after a policy was issued or expired. This casts Old Republic as a risk-taking enterprise managed for the long run. Old Republic therefore conducts the business with a primary focus on achieving favorable underwriting results over cycles, and on maintaining a sound financial condition to support our subsidiaries' long-term obligations to policyholders and their beneficiaries.

The Company is managed for the long run and with little regard for quarterly or even annual reporting periods. These time frames are too short. Management believes results are best evaluated by looking at underwriting and overall operating performance trends over 10-year intervals. These likely include one or two economic and/or underwriting cycles. This provides enough time for these cycles to run their course, for underwriting and premium rate changes to appear in financial results, and for reserved loss costs to be quantified with greater certainty.
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Old Republic International Corporation

Accompanying Financial Data and Other Information:
•About Old Republic
•Conference Call Information
•Safe Harbor Statement

Financial Supplement:
•A financial supplement to this news release is available on the Company's website:
www.oldrepublic.com

About Old Republic

Chicago-based Old Republic International Corporation is one of the nation's 50 largest shareholder-owned insurance businesses. It is a member of the Fortune 500 listing of America’s largest companies. The Company is organized as an insurance holding company whose subsidiaries actively market, underwrite, and provide risk management services for a wide variety of coverages mostly in the general and title insurance fields. Old Republic’s general insurance business ranks among the nation’s 50 largest, while its title insurance business is the third largest in its industry.

Conference Call Information
Old Republic has scheduled a conference call at 3:00 p.m. ET (2:00 p.m. CT) today to discuss its third quarter 2022 performance and to review major operating trends and business developments. The call can be accessed live on Old Republic's website at www.oldrepublic.com or by dialing 1-888-510-2411, passcode 4060501. Interested parties may also listen to a replay of the call through November 3, 2022 by dialing 1-800-770-2030, passcode 4060501, or by accessing it on Old Republic International's website through November 24, 2022.

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Old Republic International Corporation

Safe Harbor Statement

Historical data pertaining to the operating results, liquidity, and other performance indicators applicable to an insurance enterprise such as Old Republic are not necessarily indicative of results to be achieved in succeeding years. In addition to the factors cited below, the long-term nature of the insurance business, seasonal and annual patterns in premium production and incidence of claims, changes in yields obtained on invested assets, changes in government policies and free markets affecting inflation rates and general economic conditions, and changes in legal precedents or the application of law affecting the settlement of disputed and other claims can have a bearing on period-to-period comparisons and future operating results. It is possible that Old Republic's operating results, business and financial condition could be adversely affected in subsequent periods by future economic disruptions caused by the COVID-19 pandemic and the associated governmental responses.

Some of the oral or written statements made in the Company's reports, press releases, and conference calls following earnings releases, can constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward-looking statements involve assumptions, uncertainties, and risks that may affect the Company's future performance. With regard to Old Republic's General Insurance segment, its results can be particularly affected by the level of market competition, which is typically a function of available capital and expected returns on such capital among competitors, the levels of investment yields and inflation rates, and periodic changes in claim frequency and severity patterns caused by natural disasters, weather conditions, accidents, illnesses, work-related injuries, and unanticipated external events. Title Insurance and RFIG Run-off results can be affected by similar factors, and by changes in national and regional housing demand and values, the availability and cost of mortgage loans, employment trends, and default rates on mortgage loans. Life and accident insurance earnings can be affected by the levels of employment and consumer spending, changes in mortality and health trends, and alterations in policy lapsation rates. At the parent holding company level, operating earnings or losses are generally reflective of the amount of debt outstanding and its cost, interest income on temporary holdings of short-term investments, and period-to-period variations in the costs of administering the Company's widespread operations.

General Insurance, Title Insurance, Corporate & Other, and RFIG Run-off maintain customer information and rely upon technology platforms to conduct their business. As a result, each of them and the Company are exposed to cyber risk. Many of the Company's operating subsidiaries maintain separate IT systems which are deemed to reduce enterprise-wide risks of potential cybersecurity incidents. However, given the potential magnitude of a significant breach, the Company continually evaluates on an enterprise-wide basis its IT hardware, security infrastructure and business practices to respond to these risks and to detect and remediate in a timely manner significant cybersecurity incidents or business process interruptions.

A more detailed listing and discussion of the risks and other factors which affect the Company's risk-taking insurance business are included in Part I, Item 1A - Risk Factors, of the Company's 2021 Form 10-K Annual Report filing to the Securities and Exchange Commission, which is specifically incorporated herein by reference.

Any forward-looking statements or commentaries speak only as of their dates. Old Republic undertakes no obligation to publicly update or revise any and all such comments, whether as a result of new information, future events or otherwise, and accordingly they may not be unduly relied upon.

For Old Republic's latest news releases and other corporate documents:

Please visit us at www.oldrepublic.com
Alternatively, please write or call:
Investor Relations
Old Republic International Corporation
307 North Michigan Avenue, Chicago, IL 60601
(312) 346-8100

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